Criminal Justice News

Wednesday, July 11, 2012

District Business Owner Pleads Guilty to Conspiring to Violate Campaign Laws and to Obstruct Justice in a Federal Investigation

Activities Began as Early as 2001 and Involved a Number of Elections, Including the 2010 Mayoral Contest in the District of Columbia

WASHINGTON—Eugenia C. Harris, the owner of two businesses in the District of Columbia, pled guilty today to conspiring to disguise the source of campaign contributions in federal and local elections, including the 2010 District of Columbia mayoral campaign.

Harris, 75, of Washington, D.C., also admitted taking part in steps to conceal the illegal activities. Among other things, she admitted filing an amended tax return in December 2011 as part of an effort to conceal her businesses’ involvement in funding hundreds of thousands of dollars in campaign-related expenditures for the 2010 mayoral campaign. In addition, she admitted to causing others to destroy a large volume of records from her businesses because they could have revealed the extent of her involvement in the mayoral election.

The guilty plea, in the U.S. District Court for the District of Columbia, was announced by U.S. Attorney Ronald C. Machen, Jr.; Ronald T. Hosko, Special Agent in Charge of the FBI Washington Field Office’s Criminal Division; and Rick A. Raven, Special Agent in Charge of the Washington Field Office of the Internal Revenue Service-Criminal Investigation (IRS-CI).

Harris pled guilty to three charges: one count of conspiring to violate federal campaign finance law and to obstruct justice; one count of engaging in fraud and making false statements; and one count of conspiring to violate District of Columbia campaign finance law. She appeared before the Honorable Colleen Kollar-Kotelly. No sentencing date was set. As part of her plea agreement, Harris agreed to cooperate in a continuing investigation.

The federal conspiracy charge carries up to five years in prison, a fine of up to $250,000 (or twice the gross gain or loss from the offense), and other penalties. The fraud/false statements charge carries up to three years in prison, a fine of up to $250,000, and other penalties. The District of Columbia conspiracy charge carries up to six months of imprisonment and a fine of up to $5,000. Under federal sentencing guidelines, the parties have agreed that the applicable range for the offenses is 30 to 37 months in prison and a fine between $6,000 and $60,000. In addition, Harris has agreed to make restitution to the IRS for taxes, interest, and penalties owed by herself and her businesses.

“Today’s guilty plea reveals a decade-long scheme to circumvent federal and D.C. laws designed to prevent money from corrupting our elections,” said U.S. Attorney Machen. “It also confirms what many have feared: the 2010 election for D.C. mayor was tainted by the infusion of massive sums of corporate money that were illegally concealed from voters. This conviction begins to dismantle a conspiracy which for too long subverted our federal and local electoral system.”

“Today, Ms. Harris took responsibility for her role in a scheme designed to evade campaign finance laws by hiding the true source of money provided to political candidates,” said Special Agent in Charge Hosko. “Such illegal activity interferes with the fair electoral process on which our representative democracy is based. Together with our law enforcement partners, the FBI will continue to work to ensure that all those who participate in corrupt schemes are held accountable for their actions.”

“The license to run a business is not a license to engage in fraud,” said Special Agent in Charge Raven. “The defendant’s misconduct of improperly deducting expenditures on her 2010 business income tax return was purely fraudulent. IRS-Criminal Investigation uses their investigative and financial expertise to detect and hold accountable individuals who carry out these types of fraudulent schemes.”


Framework of the Scheme:
According to a statement of offense signed by the government as well as the defendant, Harris owned and controlled two businesses: Belle International Inc. and Details International Inc. both located in an office building in Washington, D.C.

The statement of offense describes Harris’s friendship and professional relationship with a person identified as “Co-Conspirator #1,” who was the sole owner of “Company A” and the majority owner of “Company B.”

According to the statement of offense, starting as early as 2001, and continuing until at least December 2010, Harris, Co-Conspirator #1, and others knowingly violated federal and D.C. campaign finance laws.

The Federal Election Campaign Act establishes limits on the amounts that individuals can contribute to individual and multi-candidate political action committees. It also prohibits a person from making a political contribution in the name of another person. The act bars a person from reimbursing a donor who has already given to a candidate. In addition, the law bans corporations from contributing money to candidates for federal public office.

The District of Columbia Campaign Finance Reform Act and Conflict of Interest Act similarly regulates financial activity intended to influence the election of candidates for District of Columbia office.

According to the statement of offense, Harris and Co-Conspirator #1, aware of the finance limits, circumvented them by funneling personal and corporate money to friends, family members, and employees to make unlawful political contributions in various elections. Co- Conspirator #1 promised to reimburse Harris for Harris’ own personal and corporate contributions as well as those that Harris obtained from others. Harris, in turn, promised others from whom she obtained contributions that their contributions would be reimbursed.

2010 Mayoral Campaign:
The statement of offense describes actions taken to channel contributions to the campaign of Candidate A, who was among those running for mayor in the District of Columbia in 2010.

For example, Harris, Belle International, and Details International each contributed $2,000 to Candidate A. Harris, at the direction of Co-Conspirator #1, also obtained contributions to Candidate A from family members, employees, and friends. Co-Conspirator #1 reimbursed Harris for the total $44,000 in campaign contributions, and Harris repaid the family members, employees, and friends.

In addition, Harris and Co-Conspirator #1, along with others, agreed to secretly fund other efforts to support the election of Candidate A. They did not report these expenditures to the District of Columbia Board of Elections and Ethics’ Office of Campaign Finance, which administers and enforces laws pertaining to campaign finance.

Among other things, Harris and Co-Conspirator #1 secretly funneled money that would be used for campaign materials, consultants, and get-out-the-vote efforts. Co-Conspirator #1 caused Company B to issue checks and wire payments to Belle International, one of Harris’s companies, so that she could use her business to pay for campaign expenses. The statement of offense lists five such checks, issued between July and September 2010, that totaled $653,800 later used for services and materials to elect Candidate A. These materials included many items bearing logos, graphics, and designs identical to those used by the campaign.

In order to conceal the various activities and account for them on the books of Co- Conspirator #1’s businesses, Co-Conspirator #1 directed Harris to submit invoices to the companies for the amounts needed for the reimbursements and campaign expenses.

Obstruction of Justice:
In her guilty plea, Harris admitted that she and Co-Conspirator #1 took steps to impede federal officials from obtaining information concerning their involvement in conduit campaign contributions, unreported political expenditures, and other activities. She admitted that she did so while knowing that the U.S. Attorney’s Office for the District of Columbia and the FBI were conducting a criminal investigation into allegations involving the 2010 mayoral campaign.

Harris filed amended tax returns, for example, in December 2011, as part of an effort to conceal the involvement of Co-Conspirator #1 in funding hundreds of thousands of dollars in campaign-related expenditures through Belle International to Candidate A, in violation of District of Columbia law.

In addition, she caused others to shred and destroy a large volume of paper records maintained by her businesses. She also caused others to destroy stored electronic records from her businesses because they could have revealed what took place in the mayoral election.

Finally, at the direction of Co-Conspirator #1, Harris made arrangements in early 2012 to travel to Brazil for three months in order to evade federal investigators. Efforts were made toward renting a house in Brazil before the trip was cancelled.


In announcing the plea, U.S. Attorney Machen, Special Agent in Charge Hosko, and Special Agent in Charge Raven commended the work of those who investigated the case for the FBI and IRS-CI. They also expressed appreciation for the work done by those who worked on the case from the U.S. Attorney’s Office, including Assistant U.S. Attorneys Ellen Chubin Epstein and Lionel Andre; Criminal Investigators Matthew Kutz, Mark Crawford, and Melissa Matthews; Legal Assistants Krishawn Graham and Nicole Wattelet; and Paralegal Specialist Shanna Hays.

Finally, they acknowledged the work of Assistant U.S. Attorneys Jonathan Haray, Mary Chris Dobbie, and Loyaan Egal, who are investigating and prosecuting this matter.

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